Ukraine-Russia tensions have limited impact on Taiwan's semiconductor industry: ITRI

工研院：烏克蘭與俄羅斯的緊張局勢對台灣半導體產業的影響有限

ITRI consulting director sees low impact on Taiwan's semiconductor industry due to bargaining power, level of exposure to critical materials


TAIPEI (Taiwan News) — As the United States and Europe warn their chip industries to diversify their supply chains amid growing Ukraine-Russia tensions, Taiwan's leading scientific research institute says the impact on the country's largest contract chipmakers is relatively limited.

A recent Techcet report raised concerns about the threat to supply chains if the standoff over Ukraine escalates between Russian and the U.S., given the latter's dependancy on Russian resources used in chipmaking such as C4F6, neon and palladium. The potential export ban on critical materials would lead to supply disruption, a heavy blow to the American and global semiconductor industries.

Industrial Technology Research Institute (ITRI) Consulting Director Ray Yang (楊瑞臨), however, sees a low impact on Taiwan's semiconductor industry for two reasons, per a CNA report.

Firstly, Taiwan's largest contract chipmakers could negotiate a favorable deal through major product bundles compared to their foreign rivals. Medium-sized semiconductor companies will suffer more from supply interruption since they lack such an advantage.

As for palladium, Russia and Ukraine are both major exporters, together accounting for 30% of the world's supply. The material is mainly used to make NAND Flash memory, of which China and South Korea are major producers, but fewer Taiwanese companies engage in this sector.

However, Yang added, that does not mean Taiwan's chipmaking giants can walk away without a scratch. Neon — a material critical for manufacturing advanced chips — might cost Taiwan Semiconductor Manufacturing Company (TSMC) more in the short term if a war between Ukraine and Russia broke out. Ukraine produces 90% of the world's neon.

The good news for Taiwanese chipmakers is that neon accounts for only a tiny share of the total production cost of advanced chips. Moreover, it can be sourced in Africa, though it would take some time to switch to new suppliers.